Beyond Eminent Domain; L. Ownby

In light of its growth, in 1986Whittle Communi cations announced its desire to obtain a downtown site on which to construct the company's head quarters. The company's employees were scat tered among several downtown buildings, and its leadership not unreasonably wanted to create in one location an atmosphere conducive to the suc cessful implementation of its enterprise. Whittle's special requirements precluded the use of unoccu pied space in nearby high-rise buildings. Its specifications for the development of a low level, campus-style structure called for a site that was generally unavailable in downtown Knoxville. Mr. Ownby ,is an attorneyin Knoxville, Tennessee. Most urban communities have development agencies empowered by their state's legislature to draw up redevelopment plans. Such legislation enables a city to purchase or condemn property located within a designated area. Spurred by the Whittle announcement, Knoxville's Community Development Corporation drafted a plan that included some of downtown Knoxville's most desirable real estate.

The land included within a redevelopment plan must be linked, at least tangentially, to a blighted condition. While this plan included property with brand-new law offices, the flagship store of Gate way Books, a new restaurant, assorted parking lots, and other viable businesses, the definition of blight was expanded to encompass "inappropriate economic use." Because some of the property was underutilized, the entire tract could be included within the redevelopment plan. To be sure, this concept has been supported in court decisions, and local lawmaking bodies have been given liberal parameters in which to operate. An astute busi nessman could implement a plan utilizing the property to its fullest economic potential; he may have been standing before Knoxville's city council in the person of Chris Whittle. Property owners generally discovered their par ticipation in the Whittle project when it was first announced in the Knoxville papers. They essen tially had two choices:sell or suffer condemnation.

Either choice deprived them of the ownership of their property. While several property owners strenuously protested the projected taking, all sold to Knoxville's Community Development Corpo ration, and avoided lengthy and expensive con demnation proceedings.

Myron Ely, a local real estate attorney and for mer property owner, said that the redevelopment created a land-banking effect. "No one wants to buy property facing condemnation," said Ely. "It places a big, black cloud over the property." Karen Sproles, owner of a popular restaurant said, "If developers and the city can do this much without telling anyone, how much more can they do? I think it was very rude the way they did it." "As it was," she said, "I feel like I had no choice." Knoxville's downtown district, like those of many cities, has suffered from a growing flight of important businesses to the suburbs. Remaining businesses and civicgroups favored any legitimate activity that would encourage people to remain downtown and spend money. Thus, despite the objections of the affected property owners, the Whittle project generated support among the busi ness community and the general public. In fact, a poll conducted for the Knoxville Journal found registered voters favoring the use of public financ ing to assist Whittle by a better than 2-to-1 margin.

Richard Cate, senior vice president for urban and government affairs for the Knoxville Chamber of Commerce, summed up much of the sentiment: "I don't think I need to remind you that we do not have companies or individuals standing in line to make this kind of investment in our communi ty-let alone in our center city.The use of this lim ited amount of tax-increment financing is the key to making the Whittle project work." Chris Whittle and his company unquestionably have made significant contributions to the Knoxville community. In April 1989,the Knoxville papers reported that he and his company were making a $5.2million gift to the University of Ten nessee-the largest in the school's history. He had previously announced gifts to UT's College of Communications to fund scholarships for minority students, and also gifts to various downtown orga nizations. Whittle Communications, like any viable business, employs local people who spend their earnings in the community; that employment is an important contribution in and of itself.

So, what is the problem? Whittle is providing jobs, enriching the economy, and making sizable donations to the community. In the old westerns, he is the man wearing a white hat and riding the white horse. The Fifth Amendment to the U.S. Constitution states". . . nor shall private property be taken for 109 public use, without just compensation." Embodied within that amendment is a principle that holds sacrosanct an individual's ownership of private property. Thus, actions by the state and those assisted by the state which tend to undermine pri vate ownership must be viewed with suspicion. LegalPlunder The perception that it is okay for you to take your neighbor's property so long as the community receives an economic benefit is reinforced each time a city assistsin the acquisition of private prop erty for private gain. Frederic Bastiat has written in The Law: "The nature of law is to maintain justice.

This is so much the case that, in the minds of the people, law and justice are one and the same thing. There is in all of us a strong disposition to believe that anything lawfulis also legitimate. This belief is so widespread that many persons have erroneously held that things are 'just' because law makes them so. Thus, in order to make plunder appear just and sacred to many consciences, it is only necessary for the law to decree and sanction it." If the law legitimates such takings, then most of us will feel better about ourselves if we favor such a project, and even more so if we derive an eco nomic or aesthetic benefit from its success. Knoxville Councilman Milton Roberts Sr. expressed a lot of unspoken sentiment when he was quoted as saying, "I want to vote for it, but I want to have a clear conscience." Whittle is not the first company to use local gov ernment to help it take other people's property. In the early 1980s, General Motors persuaded the City of Detroit to condemn a large residential neighborhood nicknamed "Poletown" for the con struction of an assembly plant, rather than lose it to relocation. Detroit was faced with the loss of a significant number of jobs and other economic benefits. GM presented the carrot and the stick; Detroit acted with a speed uncharacteristic of a government body, liquidating the property rights of hundreds of people under the power of eminent domain within six months. It has been estimated that the cost of acquiring, relocating, and providing utility serviceto the site exceeded $200million, but the site was sold to GM for a little over $8 million.

The merits of paying this kind of tribute to a large private concern in exchange for an expected preservation of the economic health of the region 110 THE FREEMAN • MARCH 1990 can be debated for years, but there can be no doubt that the impetus for the taking was founded in the private sector. A little-noticed side effect of this use of eminent domain is the public's association of business with the state's power to take. Justice James L. Ryan, the dissenting judge on Michigan;s Supreme Court, which approved the condemnation, wrote: ". . . the Court has altered the law of eminent domain in this state in a most significant way and, in my view,seriously jeopardized the security of all private property ownership. This case will stand, above all else, despite the sound intentions of the majority, for judicial approval of municipal con demnation of private property for private use. This is more than an example of a hard case making bad law-it is, in the last analysis, good faith but unwarranted judicial imprimatur upon govern ment action taken under the policy of the end jus tifying the means."

Many citizens understand the necessity of the state's power to condemn land for roads and public buildings; but when private developers initiate public condemnation of private land for private purposes that is sustained by the judicial system, their understanding of any important distinction is clouded. Heretofore, the sanctity of private prop erty has been self-evident among the general pop ulace, and the recognition of its inviolability was an impediment to encroachments of state power. Cases like Whittle and GM expand the state's concept of public purpose and tend to anesthetize the public, even if only incrementally, into a greater acceptance of future takings. Without the proper barriers to such takings that is offered by a narrower interpretation of the Fifth Amendment, what is to prevent some future court from making a determination that a privately owned rare paint ing is now the property of the general public? The quality of uniqueness, an element common to real property, has been devalued, and businesses which form partnerships with the state must share some of the responsibility for this depreciation. The KnoxvilleNews-Sentinel,in a December 1987edi torial, wrote: "Little can be said against the poten tial positive effects Whittle's plan could have on downtown redevelopment. It is a plan that could reshape the image of the center city and attract commercial and residential spinoffs of equal qual ity. . . . Blocking the potential good it could do for the center city, has been painted as akin to opposing motherhood and apple pie."

Since construction on the Whittle headquarters began in May 1989,Time, Inc., has acquired a sig nificant interest in Whittle Communications with an option to purchase more at a future date. The impact of this event mayor may not lessen the opportunity for fulfillment of Whittle's economic potential and the realization of the community's expectations. Whittle's present contributions cannot be denied; it is only when the line between public and private use has become so blurred as to offer no resistance to the exercise of state power that we may realize the inadequacy of our protest and the enormity of our sacrifice.If your neighbor, in hand with your mayor, comes to your home to take your Rembrandt for the new city art museum, be thank ful that they wanted only your painting, and not your house for the museum. D 111 Playing Hard Ball by Evelyn Pyburn M anypeoplelamentthe amountofmon ey sports figures make, but seldom does one see a close analysis of the businessto determine why such staggeringsums are available.